From Bottlenecks to Breakthroughs: How Digitization Can Solve Pharma’s Supply Chain Woes

The pandemic revealed weaknesses in traditional pharmaceutical supply chains, causing procurement challenges and reduced profits due to labor shortages, geopolitical tensions, and regulatory changes. In fact, a McKinsey study(1) found that over a 10-year period, supply chain disruptions pose a significant risk to pharmaceutical companies, potentially resulting in a 25% loss of earnings.

To address these challenges, leading pharmaceutical companies have realized that the traditional ways of supply chain management and procurement are insufficient to tackle today’s challenges, prompting a shift toward digital transformation.


Pharma Industry’s Current Struggles with Supply Chain

Let us first look at some of the current challenges that companies need to address to improve supply chain resilience and reduce disruptions:

  • Cold Chain Losses: Maintaining specific temperature parameters is crucial for preserving the quality of medicines and drug products during the supply chain process. According to the IQVIA Institute for Human Data Science(2), the pharmaceutical industry loses approximately $35 billion annually due to temperature-controlled cold chain logistics failures.
  • ‘Offshoring’: Offshoring of production and sourcing can create several challenges, including quality control issues, geopolitical risks, longer lead times, and increased transportation costs. As a result, many pharma companies are considering ‘nearshoring’ to improve supply chain resilience.
  • API and Raw Material Costs: Active Pharmaceutical Ingredients and raw material costs account for a major chunk of pharmaceutical manufacturing costs. Cost fluctuations and shortages of these materials significantly disrupt the supply chain and increase production costs.
  • Lack of Visibility: Limited real-time data access and visibility into critical KPIs hampers pharma supply chain performance.

Digitization: The Prescription for the Pharma Industry’s Supply Chain Headaches

As companies look for solutions to overcome supply chain challenges, many are turning to digital transformation. In 2023, Pharmaceutical companies will use digital supply chain tech more in 2023 to gain the following benefits.:

  • Digitization helps track products in real-time to identify and address supply chain disruptions.
  • It also ensures transparency and accountability in the supply chain.
  • Digitization automates inventory management, preventing the risk of stockouts or overstocks.

The Digital Frontier: Revolutionizing the Pharma Industry’s Supply Chain

Digital technologies have been a transformative force in the pharmaceutical industry, revolutionizing supply chains by improving collaboration, integration, and efficiency. These advancements have helped companies reduce costs and enhance patient outcomes, making it essential for pharmaceutical firms to adopt these solutions.

At Moglix, we provide innovative solutions for improving the efficiency of supply chains. Discover how we helped a leading vaccine manufacturer implement just-in-time delivery to 16 plants across India. By doing so, the manufacturer was able to unlock working capital and reduce inventory carrying costs, leading to significant cost savings.


Contact us to know more about our approach and how we can support your digital transformation strategy.






Additional Reading:

  1. https://www.mckinsey.com/capabilities/operations/our-insights/risk-resilience-and-rebalancing-in-global-value-chains
  1. https://liviri.com/wp-content/uploads/2022/10/LIV_930_White-Paper3_BIO_v03.pdf
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